The 5 Mistakes We Made in Self-Storage (And How We Fixed Them)

Transcription

1

2 The 5 Mistakes We Made in Self-Storage (And How We Fixed Them) Presented by Jason Allen, Owner/Agent Carl Touhey, Owner/Broker Performance Self Storage Group

3

4 Agenda Our top five mistakes How we fixed them The results Mistakes we see others make Plan of action

5 Mistake 1: Print Advertising

6 Marketing Mistake: Print Media Assumed Yellow Pages contact with the purchase of property Cost was $13,000 a year = $1,083 a month

7

8 Marketing Mistake: Print Media Day one of ownership, started marketing tracking program One year generated five move-ins from Yellow Pages ad Cost per move-in = $2,600!

9 Mistake 1: The Fix End of rear reviewed our marketing tracking report Cancelled ALL print advertising Designed a brand-new SEO-friendly website Moved a third of the YP cost to the Internet - $357 per month Started a pay-per-click campaign

10 Mistake 1: The Result Cut marketing budget by a third in year two Occupancy went from 75% to 95% Turned off PPC campaign once we hit 90% in year three Rank no. 1 on organic listings and local business listing Cost per move-in = $0-$60!

11 Mistake 2: Employees

12 Hiring Mistakes and Errors Poor interview procedures Didn t run credit report Didn t run crime report Didn t call references

13 Poor Hiring Procedures: Manager 1 Manager quit, we hired assistant manager to be full time Didn t do a proper background check (credit or criminal) or check references Relied solely on the manager s word and limited performance with our company

14 Manager 1: What We Discovered Allowed tenants to live in their units Rented more than 10 units to herself for $0 rent Previous employer: Claimed disability Had units at her previous place of employment that were going up for auction Suspicious activities, discovered she was part of a local theft ring Exchanging work with tenants for discounted or free rent Claimed a non-work injury was work-related

15 Manager 1: What We Discovered

16 Manager 1: What We Discovered

17 Poor Hiring Procedures: Manager 2 Full-time manager quit, we hired part-time manager New manager was young and not very experienced in a workplace environment Didn t offer proper training

18 Manager 2: What We Discovered Income started to drop over a six-month period Many tenant complaints Negative reviews online Manager was letting friends play on the facility grounds

19

20

21

22 Mistake 2: The Fix Pay more per hour for quality managers! Use a tenant-screening program for applicants. Hired third-party management company with a track record of success!

23 Mistake 2: The Results Can focus on our other businesses No calls in the middle of the night Properties and employees get the attention they need No more unemployment hearings Lowered liability True professional overseeing operations Income has started to increase Just collect a check!

24 Mistake 3: Mangers on the Phone This is a retail, customer-service-oriented business. Managers often aren t properly trained on how to effectively answer the phone and sell the property. Managers were scoring below 60% when secretly shopped.

25 Mistake 3: Managers on the Phone Hired to consult on this property, as the income had stalled Manager was one of the owners Hired secret shopper Six rings No interaction with caller No features and benefits All units are unfortunately upstairs No sense of urgency Doesn t get caller s info Scored 20% out of 100%

26 Mistake 3: The Fix Hired secret shoppers for all properties Reviewed the results with each manager Setup a bonus for the manager with the highest score Had managers do online training sessions Hired call center to handle all inbound calls They can effectively sell over the phone Allowed manager more time to focus on the property and tenants We were able to track leads for marketing purposes

27 Mistake 4: No LED Lights vs.

28 Mistake 4: No LED Lights Average electrical was $400 per month No gas service at property Installed multiple LED lights and went from 65 watts to 13 watts Install cost, material and labor: $3,500 Monthly bill reduced to $250 per month Savings of $150 per month Investment payback: 2 years 5-year cash-on-cash: 157%

29 Mistake 5: No Tenant Insurance Units getting broken into tenants not covered Damage to tenants goods tenants not covered On average, 70% of tenants don t have insurance When there s a problem, you and the manager have to handle it

30 Mistake 5: The Fix Per lease, it was mandatory that tenants provide proof of insurance Check your lease 70% of tenants didn t have homeowners or renters insurance that would cover their personal belongings in a storage unit Instead of raising rents, started mandatory tenant-insurance program Must make it mandatory Tenants goods are now protected up to a certain dollar amount You earn additional income

31 Tenant Insurance, Income Growth 2014 collected $25,129 in tenant-insurance premiums Retained $11,313 Multiple tenant claims were paid by the insurance company Insurance company handled the problems 6% cap rate = $188,000 in value!

32 Mistakes Made by Others NOT raising rents every six months to a year Continuing to use print-media marketing NOT having an effective website NOT doing monthly/quarterly audits Giving away rent when you don t have to Relying too much on the manager ( I have the best, most trustworthy manager there is. ) Paying bills Hiring employees Making marketing decisions without the facts NOT discounting problem sizes Our rule: Get half of our problem sizes to rent for half off.

33 Visit your facilities often. Audit your facilities. Track your move-ins. Plan of Action! Don t assume any contracts with the purchase of a property that don t truly benefit the facility and can t be cancelled with 30 days notice. Think before you hire; hire smart and take your time. Go green and save money. Start a mandatory tenant-insurance program. Hire a third-party management company.

34 Contact the Presenters Jason Allen Agent and Owner Performance Self Storage Group Inc Carl Touhey Broker and Owner Performance Self Storage Group Inc

35 Thank You!

36